Alcans IT Governance Model - Assignment Example

of 30 October Alcan’s IT Governance Model Question Based on the information presented in the Appendixto the Case it would appear as if Alcan would be more inclined to the quadrant relating to Responsive Solution Providers. This quadrant relates to companies that are characterized by a higher rate of change and that compete on the basis of operational efficiency. The higher rate of change characteristic is suited to Alcan which is in the aluminum industry. The industry has seen rapid changes in market conditions which has resulted in major swings in prices. The basis of the company’s competitive advantage is operational efficiency. Some of the trends in its mergers and acquisitions are indications of this. However, the company has not sought to benefit from operational synergies that are available to it. Question 2 With reference to the Weill and Ross model of IT Governance, the governance styles that are in use at Alcan in the five decision areas are outlined. Organizing Model – In this model several business unit or process leaders in the company make there own decisions. This is akin to a feudal system. This indicates that a decentralized approach is taken towards the organization and management of resources. They all have their own strategic IT plan. Investment – Investment decisions are taken as under the feudal system. The business unit leaders make decisions based on the needs of their business units. Architecture – The IT governance style appears to be that of anarchy as each user group pursues its own IT agenda. This has resulted in over 1000 applications. Of this over 400 relates to finance. This has been that way even as the CFO as head of Corporate IT. Standards – The governance style of anarchy prevails as there are really no set standards to follow. The various user groups in each business unit appear to do as they please without any regard for what is happening in similar areas in the organization. Resources – Each business unit decides on the resources that it needs. No attempt is made to determine if the competencies exist in the organization. As a result 80% of IT budget is spent on outsourcing, equipment and software. This would seem to imply that with all the mergers and acquisitions the competencies in IT has not improved but has only gotten worst. Part 3 Governance is structured in this way at Alcan because after mergers and acquisitions take place the companies basically retain their identity as separate business units. There is no attempt to benefit from economies of scale in terms of merging similar IT projects. Thus on Ouelette’s arrival three separate SAP implementation were taking place at the same time. The advantages of this type of decentralized structure are that: it allows the CIO to concentrate on key IT decisions; and the business unit executives are free to carry out their management function as they were used to before the merger. They operate as before the merger and so they do not feel constrained by higher levels of authority. The disadvantages of this structure include: the fact that business unit managers may not have the required competencies to make certain decisions; since business managers are free to make decisions without consultations they sometimes end up employing outside expertise that are already available in the organization; and they lead to increased cost of operations. Question 4 If I were employed in the position of CIO at Alcan I would adopt a hybrid model where most of the decision areas would be managed under the federal system of governance. For the organizing model a federal system would be adopted where the C-level executives and all the business unit representatives of the various operating groups would collaborate with the IT department. In terms of investment the decision should be based the governance style of the IT duopoly. This would facilitate an understanding of what the IT priorities are and how they fit with the organizations strategic plans. Collaborating with the IT department will help to reduce the levels of resource duplication in the organization. Therefore, instead of three separate SAP projects taking place at the same time there would be one project utilizing basically he same set of resources. In terms of the Architecture the company should be governed under an IT duopoly. It should emphasize flexibility and applications should only be purchased externally if it matches with the current infrastructure of the organization and is able to effectively satisfy the company’s needs. Standards are best set at the highest level of the IT function as under an IT monarchy style of governance. There should be one standard. This will ensure that the business executives of the business units do not go over board. Failing this the chaos that currently exists, where every unit manger sets his/her standard or do not have any standard on which to make decisions will continue. The resources that the IT organization should utilize should be determined as under a feudal system. There should however be a set of tried and tested resources outside of the organization which can be utilized when it is extremely necessary. Question 5 (a) I would recommend that the management of Alcan perform an audit of its current IT infrastructure and applications; properly standardize the IT applications of the organization; eliminate any additional application resulting from new business acquisitions or mergers; assess the competency level of IT staff and reduce it levels where the IT department can function both efficiently and effectively. An audit of IT infrastructure and the several business applications in use at Alcan should be done. This will help the company to determine which applications are suited to the needs of the organization. The ones that meet the strategic goals of the organization should be chosen and other systems eliminated. This recommendation is in accordance with the plans of Ouelette because he noted the task involved in obtaining information. He likened it to a manual system because most of the applications did not appear to interface with the current infrastructure. The business applications should be standardized in order to reduce cost of operations and maintenance. Any new purchases should be able to interface with the current system and should result in higher levels of IT efficiencies at Alcan. I would recommend that whenever a merger or an acquisition takes place the first tasks of the IT department should be an assessment of the IT infrastructure and applications to determine how it fits with Alcan’s current IT systems. If it does not fit and cannot be properly interfaced with the current system then the necessary steps should be taken to eliminate it overtime. The appropriate business application chosen should be in accordance with Alcan’s strategic goals. It may be possible to reduce IT staff in order to benefit from synergies from these mergers and acquisitions. Having too many applications have led to an increased workload at Alcan, especially in finance which has almost 40% of the over 1000 applications in use. Having over 1000 applications means that when something goes wrong outside help will have to be called in relation to all applications. This many applications in use is one of the points mentioned by Ouelette and it seems pretty obvious that overtime he will address this issue. In any merger or acquisition, one of the first tasks of management is to eliminate duplications. Although the units operate as separate businesses, employees who do not perform a key role should be eliminated quickly. By doing so there will be less duplication and the company will be better able to benefit from the economies of scale and other synergies that can be derived from these events. There is no need for a large IT department in these companies. One or two key individuals should be able to work with Corporate IT. Most of the companies budget is spent externally and it suggests that there are either limited skills within the organization or the available skills are not been tapped. An audit of the department in each business unit should be done. If the skills required are not available then steps should be taken to send some people packing and recruit persons with the necessary skill levels required to lead various projects in the organization. Ouelette has already sent some staff packing and it is almost certain that as time goes by others will be separated from the organizations and some new and competent workers recruited. Question 5 (b) The governance model chosen in question #1 was that of the Responsive Solution Provider. In order for this to be possible Accenture IT governance model (p. 5) has suggested that the technology standards should be defined. This is one of the implicit suggestions made by Ouelette. Additionally, the governance model suggests the selection of reliable IT vendors and this has been a suggestion of Ouelette to narrow the number of vendors. Based on his approach so far it would suggest that the vendors who have instituted proper working systems would be engaged in terms of any outsourcing activities which are consistent with their area of competence. In keeping with Accenture IT Governance model a hybrid system would be in place based on the mix of federal, duopoly and IT monarchy in different areas of decision. The business units would be responsible for investments but they would have to collaborate with other business units and IT department before making a final decision. Furthermore, decisions taken would have to be in keeping with the company’s standards. Based on the changes so far this model reflects the direction in which Ouelette is going. References Dube, Line, Carmen Bernier and Vital Roy (2009). Taking on the Challenge of IT Management in a Global Business Context: The Alcan Case – Part A. International Journal of Case Studies in Management: 7(2) Read More